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Wednesday, 14 June 2017

Is Now The Right Time To Upsize?

There comes a time in every parent’s life where the family home, however much we may love it, is no longer right for their family. Everything starts to feel cramped, or lackluster or just plain uncomfortable.. In short, your house stops feeling like home.

In some cases we can make our home seem brand new by carrying out some important renovations but for a great many reasons this may just not be enough for you and your family.

There are a variety of reasons why it might be time for upsizing.

Your family’s about to get bigger

Many people associate the anxiety and uncertainty of pregnancy with having your first baby. While there’s no denying that accommodating your first child is a tremendous upheaval, it can be just as daunting a prospect the second, third or fourth time around.

As your family grows you may find that you simply don’t have the space in your home for another tiny person, especially if you think they may not be the last addition to your family.

A new baby is just one reason for your family to expand. More and more of us are bringing elderly parents and / or in-laws into our homes in order to care for them while affording them a measure of independence.

Perhaps you even have a grown up son or daughter ‘returning to the nest’ following a graduation, a separation or just looking for somewhere to call home while they save for a deposit on their own place.

This will obviously require accommodations, meaning an extra room or even extra bathrooms or a bigger kitchen.

Your income is growing

If this is the first home you’ve ever owned with your partner then chances are it was bought as a starter home; that first all-important step on the property ladder. Unless you were extremely lucky, the chances are that you would have had to make some concessions and set aside one or two items on your wish list for the sake of moving into your first home.

As you or your partner get that long sought after raise or promotion you might find that you’re able to set aside a little more than you could previously and couple it with your existing equity to finally pursue that ideal home.

You’re now working from home

As communications technology becomes exponentially more sophisticated and commonplace, it’s no surprise that the number of people who telecommute from home is steadily increasing. For busy parents, this is an ideal opportunity to meet all of our existing work commitments while still being on-hand to give our kids the care, love and support they need before they’re ready to go to daycare or school.

Working from home has some incredible benefits but it also has some caveats. The foremost of which is the need to compartmentalize your home office from the rest of the house (or you’ll find yourself changing diapers or hanging out laundry in the middle of an important conference call). This compartmentalization may not be possible in your existing home, so upsizing to convert a dedicated room to your home office with the space and connectivity to work effectively from home.

You just need more space

A small, one bed apartment might have seemed like more than enough when you and your partner first move in together but if you want to host a dinner party, accommodate guests, or just get out of each other's’ way for a while then you may just need some more space.

If you have teenaged, or pre-teen kids then it’s possible that they need a little extra space in order to establish their independence and let off steam when the growing pressures of being a contemporary teenager get a little much for them.

Plan and prepare

Whatever your personal or practical reasons for upsizing, as with anything, it’s important to do it right, and while there’s a whole lot of information out there to help first time buyers, it’s somewhat harder to come across decent, independent advice on upsizing.

Whether upsizing or buying for the first time, a lot of the financial considerations are pretty similar, and in both cases it’s important to make sure that you plan and prepare before committing yourself financially.

Can you afford the monthly commitments?

As our financial situation improves, it’s easy to become overconfident in our ability to weather the financial implications of moving to a larger property.

Of course, your first consideration will be the mortgage and it’s important to know how much the equity on your existing property (combined with any savings you may have pieced together) will afford you. This mortgage calculator is a useful tool to glean an understanding of how much you can expect your monthly mortgage payments to be but these are by no means the only costs you should take into account.

As with any big move, it’s important to consider the hidden costs of the act of moving itself which might include:

Conveyancing

Surveyors and valuations

Mortgage arrangement feeds

Realtor’s / estate agents fees

Indemnity fees

Broker’s fees

If you’re likely to need to carry out some renovations then do you have the finances set aside, the time, the patience and the expertise to carry out the project before you’re ready to move in. Of course you can project manage your renovations while living on site, but there are obvious concerns when you have young children living in what is essentially a construction site.

Larger properties (especially those on larger plots), will tend to be higher in taxes and cost more in utilities. Larger houses tend to use more water and by virtue of their size cost a great deal more to heat or air condition as the seasons change.

It’s hugely important to communicate with your realtor to try and get an estimation of these costs.

The additional expenses may not seem like that much more than you’re already paying but over the course of a year they all add up.

Avoid wasteful spending

When you move all your stuff into your new home, will the amount of empty space be daunting for you? If so, it’s an understandable reflex to overspend on furniture and accessories just to make your new home feel full and ‘homey’.

Those of us who’ve compromised on our first property may feel the need to make everything perfect the second time around. This can lead to a lot of wasteful spending on cosmetic flourishes and installing a new kitchen or bathroom before you’ve moved in.

While there’s absolutely no reason why you shouldn’t do these things, it may not be financially prudent to do them as soon as you move in.

More house - more maintenance

If you balk at the thought of cleaning, gardening and carrying out basic household repairs then the problem will only be magnified by a larger property. If your commitments to work and family leave you with little time to beautify your surroundings, then it may be difficult to give your new, larger home the care and attention it needs.

If you’re lucky enough to be able to afford someone to do this for you on a regular basis that’s great but you should certainly factor the associated costs into your projected budget.

Your new home could be harder to resell

However well-informed we are in our property buying decisions, none of us can predict the whims of the market on a long-term basis. Nobody wants to sink their capital into a money trap that could be rendered unsellable by a negative hit on the housing market, especially properties in large cities where space is at a premium.

Even if you expect this to be your new home for life it’s prudent to at least consider the possibility that you might have to downsize or sell up at some point.

If, heaven forbid, you should separate from your partner, the pressure of needing to sell a home when the market is against you can hugely complicate an already difficult situation.

If you or your partner should find yourself unexpectedly unemployed or unable to work for health reasons, then your equity may be a life raft that you’ll need to access quickly, and this may not be possible if you’re struggling to sell your property.

Remortgaging, of course, is an option but the high value of your property could result in less than favorable new payments.

Wherever you are in your parenting journey, upsizing can be an exciting and wonderful experience and a huge step forward for your growth as a family. Just be sure that you’re making all the right decisions and considering all the variables before you move and you can focus your time and attention on the fun stuff… like what topping you’re going to have on your pizza on moving night?